Process

What are the steps to declare bankruptcy?

Step 1 : Contact a licensed insolvancy trustee and make an appointment for a free consultation to analyze your financial situation and determine the options available to you.

To find a licensed insolvancy trustee in your area, check the Yellow Pages online and type in the keyword “licensed insolvancy trustee”.

The licensed insolvancy trustee will evaluate your financial situation and explain the benefits and consequences of different options available to you to solve your financial problems.

Step 2 : Work with the licensed insolvancy trustee to fill the prescribed forms The licensed insolvancy trustee will then file the bankruptcy case with the Office of the Superintendent of Bankruptcy.

The licensed insolvancy trustee will prepare the necessary documents and will file them to the Office of the Superintendent of Bankruptcy. You will then be officially declared in bankruptcy. From that time, the licensed insolvancy trustee will deal directly with your creditors.

Once you’re bankrupt :

• you can stop making payments to your unsecured creditors;

garnishments of your salary are suspended;

• prosecutions against you by your creditors are suspended (interrupted).

Step 3 : The licensed insolvancy trustee sells your assets and you make payments to the licensed insolvancy trustee.

The licensed insolvancy trustee then sells all your assets, except those covered by an exemption under provincial or federal legislation, and holds the proceeds in trust for allocation among your creditors. You must assign all assets you own as well as those acquired prior to the release of your bankruptcy.

Once you have filed for bankruptcy, you can not dispose of the assets transferred to the licensed insolvancy trustee.

During bankruptcy, you are also required to make payments to your licensed insolvancy trustee for distribution among your creditors.

The licensed insolvancy trustee determines the amount you will be required to pay. The amount is calculated based on your total income, income governing standards issued by the OSB, you personal situation and your family situation.

The licensed insolvancy trustee will notify all your creditors of your bankruptcy. Depending on the extent of the expected bankruptcy active, there may be a creditors meeting.

Step 5 : You attend the creditors meeting (if necessary).

The purpose of this meeting is to allow creditors to obtain information about the bankruptcty; to confirm the appointment of the licensed insolvancy trustee; to appoint up to five inspectors to oversee the administration of the estate; to allow creditors to give instructions to the licensed insolvancy trustee.

Step 6 : You will be questionned by an agent of the OSB, if necessary.

After declaring bankruptcy, you can be questionned under oath by a representative of the Office of the Superintendent of Bankruptcy. The purpose of the questionning is to ask you about the causes of your bankruptcy and the disposal of your properties.

Step 7 : You attend two financial counseling sessions.

The purpose of these sessions is to help you analyze and understand the causes of your bankruptcy. These sessions will provide you with information that will help you manage your finances in the future.

The licensed insolvancy trustee prepares a report for the OSB describing your actions during the bankruptcy.

In some cases, the licensed insolvancy trustee prepares a report regarding your request for release. This report describes your financial situation and presents an analysis of the following :

your finances;

the causes of your bankruptcy;

how you have met your obligations under the Bankruptcy and Insolvency Act (BIA);
;

your conduct before and after the bankruptcy;

the fact that you have been or not convicted of an offense under the BIA (articles 198-208);

any other facts that could justify an objection by the court for your release.

Step 9 : Attend the discharge hearing, if necessary.

You will be automatically discharged nine months after filing for bankruptcy if you meet the following criteria :

this is your first bankruptcy;

your release is not challenged by the Office of the Superintendent of Bankruptcy, the licensed insolvancy trustee or a creditor;

• you have not refused to participate in counselling session or failed to participate;

you are not required to pay part of your surplus income to the bankruptcy estate, according to standards established by the OSB.

If you are required to make payments of surplus income, you will qualify for statutory release after having paid part of your surplus income to the bankruptcy estate for 21 months.

In the case of a second bankruptcy, if you do not have to make payments of surplus income, you will be released automatically 24 months after the date of bankruptcy. If you need to make payments, you will only be eligible for statutory release after having paid part of your surplus income to the bankruptcy estate for 36 months.

If you get statutory release, there is no court hearing and the licensed insolvancy trustee will send you a copy of the release.

For debtors who are not eligible for statutory release, the licensed insolvancy trustee goes to court to ask for a release.

At the time of the hearing, the licensed insolvancy trustee’s report serves to inform the court of the circumstances of the bankruptcy.

The court chooses one of the following forms of release :

Absolute discharge – with an absolute discharge, you are released from the obligation to repay the debts that you had when you filed for bankruptcy, except for certain types of debts that are excluded (see step 10).

Parole – in the case of parole, you must meet certain conditions to obtain your absolute discharge. You will usually be required to pay a certain amount of money during a given period. However, the court may also impose other conditions. Once these conditions are met, an absolute discharge is granted.

Suspended release – a suspended release is one that does not take effect until a later date.

• Denied release – the court has the right to deny a release.

Step 10 : The bankrupt is released

Once you are discharged from bankruptcy, you are also freed from the legal obligation to repay the debts that you had when you filed for bankruptcy, except some types of debts, including :

payments of alimony to a former spouse or children;

student loans, if you completed your degree less than 7 years ago;

fines or financial penalties imposed by the court;

debts arising from fraud.

Note that bankruptcy does not affect the obligations of persons having guaranteed or endorsed a loan for your account.

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